UK sports betting companies bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting starts to spread out in America.
From Tuesday, brand-new rules on sports betting came into impact in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The modifications are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.
The industry sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is especially appropriate.
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But the industry states relying on the US stays a risky bet, as UK companies deal with complex state-by-state regulation and competition from entrenched regional interests.
"It's something that we're actually concentrating on, however similarly we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external released in January.
Firms are wanting to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to regional lawmakers.
That is expected to cause significant variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the marketplace.
Potential profits ranges from $4.2 bn to almost $20bn annually depending on elements like how many states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I think the majority of individuals ... are looking at this as, 'it's a chance but it's not going to be $20bn and it's going to be state by state and it's going to take some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual revenue.
But bookies deal with a far different landscape in America than they perform in the UK, where wagering shops are a regular sight.
US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip up until fairly just recently.
In the popular creativity, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise lots of forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to get rid of challenges.
While sports betting wagering is generally viewed in its own classification, "it plainly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he states UK companies should approach the marketplace thoroughly, choosing partners with caution and preventing missteps that could lead to regulator backlash.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is an opportunity for company," he says. "It actually depends on the outcome of [state] legislation and how the business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which want to collect a percentage of earnings as an "integrity cost".
International companies face the included challenge of an effective existing gaming market, with casino operators, state-run lottery games and Native American people that are looking for to safeguard their grass.
Analysts say UK firms will need to strike collaborations, providing their competence and innovation in order to make inroads.
They point to SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has actually been purchasing the US market given that 2011, when it acquired 3 US firms to establish an existence in Nevada.
William Hill now uses about 450 people in the US and has revealed partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada but that's not always the objective all over.
"We definitely plan to have a really significant brand name existence in New Jersey," he stated. "In other states, it will simply depend on regulation and potentially who our regional partner is."
"The US is going to be the biggest sports betting wagering market on the planet," he added. "Obviously that's not going to take place on the first day."
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